PUD, island leaseholders nearing settlement

Grant County PUD commissioners are considering 36-year leases with Crescent Bar Island leaseholders that would put an end to the five-year court battle between the two sides.

Staff recommended the proposed settlement to commissioners on Tuesday while the boards of four leaseholder associations were hearing the same recommendation at a meeting in Seattle.

Both sides are being asked to sign a memorandum of understanding that outlines the conditions of the settlement. Commissioners could vote on the MOU at their April 14 meeting.

For the settlement to be official, the island’s three residential groups and the island property management company would need to approve the proposal, as would the Federal Energy Regulatory Commission, which oversees the license to the PUD’s Columbia River dams.

So while the proposed MOU doesn’t settle the lawsuit, it is a commitment to settle, said Jeff Grizzel, natural resources director for the PUD.

The proposed settlement returns 80 percent of the former leased area back to full public access, bringing the PUD in compliance with FERC policy that requires the utility to maximize public access to PUD lands.
Under the proposal, the islanders would:

• Get new leases that would expire when the dam’s current license expires in April 2052. However, the PUD can opt to end it in 2047 — five years earlier — by giving the islanders five year’s notice, which would come in 2042.

• Relinquish control over all but the existing footprints of their North RV Park, South RV Park and Condo residential areas — a total of 38.5 acres, or 20 percent of the total 194 acres that include the island and a strip of off-island shoreline where a campground and boat launch now are.

• Agree to pay fair market-value lease payments, as determined by the average of two property-value assessments determined by two appraisers that both sides agree upon.

• Agree to pay water, sewer and garbage fees. Also agree to annual adjustments to the rents that are based on the Consumer Price Index.

• Pay back rent to June 2012, when their current long-term leases expired on the land under their condos and RV homes. Back rent will be based on fair market value.

• Pay 90 percent of the upgrade costs of island water and sewer systems. The PUD would pay 10 percent.

• Agree to fire safety code compliance inspections by the Grant County fire marshal. Each association will develop a county-approved plan and schedule to address any violations.

• Both sides would agree to dismiss two pending lawsuits, one in Eastern Washington federal court and the other in appeals court. Each party would pay its own legal fees.

The PUD and islanders have a lease that dates back to 1962, when the leaseholders leased the 194 acres from the PUD. In 2010, PUD commissioners voted to discontinue residential use of Crescent Bar Island and ordered about 400 leaseholders to be evicted by June 2012, the date the leases to the land under their island condos and RV homes expired.

Then, in January 2011, island residents and their associations sued the PUD and Port of Quincy to remain on the island. (The Port of Quincy previously settled with the islanders.) Any attempts at mediation between the two sides went unsuccessful until late last year.

It was the crack in the Wanapum Dam and the drawdown of the Wanapum Reservoir that re-instigated those talks between the two sides, Grizzel said. During the drawdown, the PUD was able to complete some in-water work at Crescent Bar, including dredging of the boating canal and installing a new boat ramp. The work opened up discussions again between the two sides, Grizzel said.

Settlement discussions began in December 2014 following the urging of a federal judge in U.S. District Court that the two parties settle rather than go through a costly trial. To date, the utility has paid about $3.2 million in legal costs.

Commissioner Dale Walker expressed concern about what happens if both sides sign the MOU and FERC does not, or if leaseholders don’t accept any future FERC requirements.

If both sides accept the proposed settlement, the utility would submit an application to FERC later in the year requesting authorization to enter into the new leases. FERC may not respond until early 2016.

“I think there is an understanding on both sides that there is a risk,” Flint said.

Grizzel said he is optimistic FERC will be responsive.

“I have a fairly high level of confidence that FERC will approve this,” he said.

In a letter to commissioners, the three island representatives stated they also are confident the MOU will gain the support of the islanders and the four associations representing them.

“While some may question the results initially, we are confident they will understand the overall agreement is fair and practical,” the letter states.

The four associations are expected to vote on the proposed settlement by April 7, Grizzel said.

If all parties approve the terms, the PUD would begin on-island and off-island redevelopment work this year to build new boat launches, add day use areas, parking lots, hiking trails, swim beaches and more.

Two development options for the island, one that includes the island golf course and one that doesn’t, will be proposed for public discussion in the coming months.

Crescent Bar Inc. currently operates the golf course; however, Grant PUD will reclaim ownership of the golf course if the settlement is signed, Grizzel said.